Tribunal partially allows appeal on Section 10A exemption but upholds directions on book profit & additional depreciation.

The Tribunal partly allowed the assessee's appeal, setting aside the Principal Commissioner of Income Tax's order regarding the exemption under Section 10A. The Tribunal found that the Assessing Officer had conducted a detailed enquiry and followed a permissible view. However, the Tribunal upheld the Principal Commissioner's directions on the computation of book profit under Section 115JB and the claim of additional depreciation on old and used machinery, as the Assessing Officer had not adequately addressed these issues.

---

---

Issues Involved:
1. Invocation of power of revision under Section 263 of the Income Tax Act by the Principal Commissioner of Income Tax (Pr. CIT).
2. Claim of exemption under Section 10A of the Income Tax Act.
3. Computation of book profit under Section 115JB of the Income Tax Act.
4. Claim of additional depreciation on old and used plant and machinery.

Issue-Wise Detailed Analysis:

1. Invocation of Power of Revision under Section 263:
The Pr. CIT invoked the power of revision under Section 263, arguing that the assessment order passed by the Assessing Officer (A.O) was erroneous and prejudicial to the interest of the revenue due to lack of proper enquiry and application of mind. The assessee contested this, arguing that the A.O had conducted a detailed enquiry and had applied his mind before passing the order. The Tribunal noted that for Section 263 to be invoked, the order must be both erroneous and prejudicial to the interest of the revenue. The Tribunal found that the A.O had conducted a detailed enquiry and had made a permissible interpretation of the law, thus the invocation of Section 263 on this ground was not justified.

2. Claim of Exemption under Section 10A:
The assessee claimed exemption under Section 10A for profits earned from its SEZ unit before setting off losses from other units. The Pr. CIT argued that this was against the CBDT Circular No. 07/2013, which mandates setting off losses before claiming exemption. The Tribunal referred to the Supreme Court judgment in CIT & Anr V/s Yokogawa India Ltd, which clarified that the deduction under Section 10A should be computed independently before setting off losses. The Tribunal found that the A.O had made a detailed enquiry and had followed a permissible view supported by the Supreme Court judgment. Therefore, the A.O's order allowing the exemption under Section 10A was not erroneous or prejudicial to the revenue, and the Pr. CIT's revision on this ground was set aside.

3. Computation of Book Profit under Section 115JB:
The Pr. CIT noted that the A.O had failed to add back the interest paid on income tax while computing the book profit under Section 115JB. The assessee conceded this point. The Tribunal upheld the Pr. CIT's direction to the A.O to recompute the book profit by including the interest paid on income tax, as the A.O had not applied his mind to this issue.

4. Claim of Additional Depreciation on Old and Used Plant and Machinery:
The Pr. CIT observed that the A.O had allowed additional depreciation on old and used plant and machinery, which was not permissible under Section 32. The assessee conceded this point as well. The Tribunal upheld the Pr. CIT's direction to the A.O to verify and correct the claim of additional depreciation, as the A.O had not properly examined this issue.

Conclusion:
The Tribunal partly allowed the assessee's appeal. It set aside the Pr. CIT's order regarding the exemption under Section 10A, finding that the A.O had made a detailed enquiry and followed a permissible view. However, it upheld the Pr. CIT's directions regarding the computation of book profit under Section 115JB and the claim of additional depreciation on old and used machinery, as the A.O had not adequately addressed these issues.

---